For businesses that rely on subscription billing or automated charges, reducing churn is crucial to long-term success. When customers stop paying, either by choice or by acciden,t it directly impacts your revenue and growth. Whether you’re running a SaaS platform, a streaming service, or a membership-based model, it’s essential to understand why customers leave and how to prevent it.
We’ll break down smart, easy-to-follow steps to help you tackle churn effectively, especially in recurring payment setups. But first, let’s understand, what exactly is Churn.
| Table of Contents What is Churn? Understanding the Difference: Voluntary vs Involuntary Churn Improve Customer Experience to Prevent Voluntary Churn Optimise Your Recurring Payment System to Reduce Involuntary Churn Analyse Churn Data Regularly Offer Flexible Plans and Pause Options Communicate Proactively Reward Loyalty |
What is Churn?
Churn means the number or percentage of customers who stop using your product or service over a given period. In recurring payment models, this means subscribers who cancel their plans or whose payments fail repeatedly. Churn can be voluntary when a customer decides to leave or involuntary when a payment fails due to issues like expired cards or insufficient funds. Understanding churn helps you identify weak points in your customer journey and improve retention.
Understanding the Difference: Voluntary vs Involuntary Churn
Before reducing churn, it’s important to know that there are two types: Voluntary churn and Involuntary churn.
1. Voluntary churn takes place when a customer actively decides to cancel their subscription. This could be due to poor service, high pricing, or a change in their needs.
2. Involuntary churn occurs when payments fail due to expired cards, insufficient balance, or technical errors. The customer often doesn’t even realise their subscription ended.
Both types are harmful, but they require different strategies to fix. Let’s explore both in detail.
Step 1: Improve Customer Experience to Prevent Voluntary Churn
Voluntary churn is often a clue that something is not working for your customer. It could be your product, support, or pricing. So if you’re planning on reducing churn, try adopting the following methods:
a) Offer Real Value
Make sure your product or service delivers consistent value. Keep updating features, fixing bugs, and improving usability.
Example: If you run an online learning platform, introduce new courses regularly and offer certification to keep users engaged.
b) Provide Excellent Support
Fast, friendly, and helpful support can turn unhappy customers into loyal ones. Offer live chat, email, or even WhatsApp support.
c) Personalised Engagement
Use data to better understand how customers interact with your service. Send reminders, usage tips, or offers based on their behavior.
Example: A fitness app can send customised workout suggestions to users who haven’t logged in recently. This keeps them coming back.
By investing in your product experience and customer care, you’ll be reducing churn significantly, especially voluntary ones.
Step 2: Optimise Your Recurring Payment System to Reduce Involuntary Churn
Involuntary churn is tricky because the customer may still want your service they just didn’t pay successfully. Mostly, it’s due to technical issues.
To avoid this, optimise your recurring payments:
a) Use Smart Payment Gateways
Choose a payment gateway that supports features like automatic retries, expiry tracking, and real-time alerts. This ensures a higher success rate for recurring transactions.
Example: If a card payment fails today, the gateway should retry after a few hours or days before cancelling the subscription.
b) Enable UPI and Multiple Payment Options
Not everyone prefers card payments. Offering UPI, net banking, or wallets can help you recover failed payments easily.
c) Notify Before Charging
Send reminders a few days before any recurring transaction is due. This gives customers a chance to update payment info or ensure funds are available.
d) Auto-Update Billing Info
Some recurring payment solutions allow tokenization and card auto-update features, which help reduce involuntary churn due to expired cards.
Step 3: Analyse Churn Data Regularly
You can’t fix what you can’t measure. Tracking churn metrics helps you find patterns and fix root causes.
1. Look at why customers cancel.
2. Check when and how recurring payments fail.
3. Segment churn by customer type or region.
Example: If you find that a lot of churn is happening after the second month, maybe your onboarding process needs improvement.
Monitoring these patterns helps you take focused action on both voluntary churn and involuntary churn.
Step 4: Offer Flexible Plans and Pause Options
Not every cancellation means a customer is gone forever. Sometimes, they just need a break.
1. Offer customers to pause their subscription instead of cancelling.
2. Offer discounts or custom plans to retain price-sensitive users.
Example: A digital magazine can allow users to pause their subscription for up to 2 months instead of quitting completely. This way, they’re more likely to return.
These small changes can significantly reduce voluntary churn and build customer goodwill.
Step 5: Communicate Proactively
Regularly communicating with customers builds trust and keeps your brand top-of-mind. When customers feel informed & valued, they are less likely to leave.
What to communicate:
1. New features or upgrades
2. Renewal reminders
3. Tips and usage guides
4. Payment issues and fixes
Example: If a recurring transaction fails, send an SMS or email with a payment link and a clear message like, “Oops! Your last payment didn’t go through. Click here to fix it.”
Proactive communication also helps reduce involuntary churn, especially in mobile-first markets.
Step 6: Reward Loyalty
Rewarding long-term customers with exclusive offers, badges, or early access to features encourages them to stick around longer.
Example: A language learning app can offer a free month for every 12 months of continuous subscription.
Loyalty programs help fight voluntary churn by making your customers feel appreciated.
Conclusion
Reducing churn in models based on recurring payments isn’t about just fixing failed payments it’s about creating a complete system that’s customer-friendly, data-driven, and resilient. While voluntary churn demands better engagement and service, involuntary churn calls for smarter tech and seamless billing experiences. By combining solid recurring payment solutions, proactive communication, and strong customer support, you can build a business that customers won’t want to leave, intentionally or otherwise.
Keep listening to your users. Keep refining your systems. And most importantly, never underestimate the power of one successful recurring transaction it could be the beginning of a long-term customer relationship.
